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Dalian Coking Coal Ends Flat In Volatile Trade

Dalian coking coal and coke futures fluctuated wildly on Tuesday, mirroring market unease over regulatory intervention in China to tame surging prices of coal in particular.

The most-traded January coking coal on China’s Dalian Commodity Exchange DJMcv1 rose as much as 3.9% before falling by up to 3.4% within the first two hours of trading. It ended daytime session steady at 2,950.50 yuan ($462) a tonne.

Coke – the processed form of coking coal and the primary reducing agent for key steelmaking ingredient iron ore, rose 3% to 3,790 yuan a tonne, after slumping 2.4% in early trade.

“The collective price of coal-related futures has turned from strong to weak,” analysts at Sinosteel Futures wrote in a note, attributing the market volatility to Beijing’s resolve to ensure supply and stabilize prices.

“They will implement intervention measures on coal prices in accordance with the law, causing market panic,” they said.

On Tuesday, China’s top economic planner – the National Development & Reform Commission (NDRC) – said it was studying a mechanism to stabilise coal prices over the long run, in its latest move to cool the red-hot market.

That followed the agency’s statement on Friday saying it would send teams of inspectors to major coal producing regions to probe the costs of coal production and circulation.

Tight supply in China, the world’s biggest steel producer, propelled coking coal and coke prices to record peaks earlier this month.

Dalian iron ore jumped 3%, rising for a second day, while the benchmark contract on Singapore Exchange SZZFX1 was up 3.6% by 0729 GMT.

Construction steel rebar on the Shanghai Futures Exchange SRBcv1 gained 0.6%, while hot-rolled coil SHHCcv1 shed 1.1%, under pressure after China said it would roll out a pilot real estate tax in some regions.

Stainless steel rose 2.2%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila)

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